FG to review power sector privatisation
The Federal Government said it has commenced the process of revisiting the privatization of power sector in the country.
This is coming barely 19 days to the fourth anniversary of the power sector privatisation.
Speaking yesterday at the closing press briefing of the 23rd Nigerian Economic Summit, Minister of State for Budget and National Planning Hajiya Zainab Ahmed said government was discussing with relevant stakeholders to allow fresh investors inject more funds into the sector.
The Minister also noted that since the power assets were privatized, Nigerians have not derived the intended benefits thus the need to review current investments in the sector.
Government had injected N701.9 billion to enable businesses flourish and it was intended to save the GenCos, the gas companies and their financiers from collapse.
“The power sector has been privatized but every Nigerian will attest to the fact that the privatization hasn’t worked out well because what we sought to achieve in the development of the power sector hasn’t yet happened” She said.
Mrs Zainab said “No new investor will be interested to come in with the level of tariff obtainable now.
“It is very clear that no new investor will be coming without having a satisfaction from the tariff that will be obtainable in the industry.
“That is a discussion that must be held. It is very clear to us now that the level of tariff we have now is not obtainable. It will be a subject of negotiation between government, the existing investors and new investors as well as consumers.
“We will try to attain to optimal level that will make an impact on the tariff. The starting point will be the Discos.”
At the opening of the summit Tuesday, Vice President Yemi Osinbajo told the electricity distribution companies (DISCOs) to invest and run their businesses profitable or sell to those who can, if they were not able to manage them.
The FG has 40 percent equities in the 11 DISCOS while the DISCOs owners have 60 percent equity. Recently, the Senate backed the review of the privatisation process. Chairman of the Committee on Privatisation, Senator Ben Murray Bruce (PDP, Bayelsa) said at the plenary that “They [power distribution companies] are technically bankrupt. Unless we revisit the entire privatization process, unless we understand and dissect what went wrong, we will still get estimated billing. We have a catastrophe in our hands. There will be no light in Nigeria under the current structure.”
Executive Secretary of the Association of Power Generating Companies (APGC), Dr Joy Ogaji told Daily Trust yesterday that whoever is representing government including the Bureau of Public Enterprises (BPE) should be repositioned to move the sector forward.
“For the Generation Companies (GenCos), I don’t think government has major shares again because most of the GenCos were sold 100 per cent.
“For the three hydro GenCos, government cannot do anything until the 30 year concession period is exhausted. BPE in its inspection said the GenCos have exceeded their Key Performance Indicators (KPI) and business plan.”
For the Distribution Companies (DisCos), Dr Ogaji said, “From the onset government should have used the benchmark or the KPI in the performance agreement to vigorously monitor the DisCos.”
The Minister of Power, Works and Housing, Babatunde Fashola had said that reviewing the privatisation and finding solutions to the liquidity and technical crises was part of the ongoing implementation of the Power Sector Recovery Programme (PSRP).
The programme if effectively executed is expected to reposition the sector and ensure Nigerians begin to enjoy 4,000 megawatts per hour (mwh/h) from 2018.
Spokesman for the Association of Nigerian Electricity Distributors (ANED), Barrister Sunday Oduntan had declared in a presentation at a workshop for reporters on Wednesday that government should implement a cost reflective tariff, create a special intervention fund and pay all the MDAs debts promptly to ease liquidity in the sector.
He said the 11 Distribution Companies (DisCos) have reduced customers metering gap by 2.2 million since the power sector was privatised in 2013.
According to him, the private investors met a 5 million metering gap in the sector, when they took over on November 1, 2013 and reduced that gap to 2.8m.